Wednesday, July 31, 2013

Investors recieve a bond in exchange for money which serves as a loan to the bond issuer. When the bond matures, you will receive the face value of that bond. The face value is what you initally paid for the bond. The interest of a bond is known as the coupon. The investor is promised to recieve the full par at the maturity date with regular interest payments.

Monday, July 29, 2013

This week’s “pin” features stocks. We
have compiled a list of basic stock fundamentals with links to further explain
the material provided.

1) Sectors.Sectors
are a way of categorizing and classifying stocks. They are typically classified
by type of business or industry.The
fastest growing sectors are currently the health and technology industries,
although that varies often.

2) Growth vs. Value.Growth stocks are just as they sound:
they are anticipated to grow at an above-average rate. Value stocks, on
the other hand, are viewed as bargains in the sense that the market has
undervalued the stock and the investor hopes to get in before the market
corrects the price.

3) Company size (“capitalization”).A company’s size is
measured by its market capitalization.Large-cap companies are typically established
with a lower growth prospective than small cap. Small-cap companies tend to
have higher growth potential in the long run, but investors may see more
volatility with small-cap stocks since small companies have a higher likelihood
of running into trouble as they expand.

4) Risk.The
possibility of a stock performing worse than expected. There are many types of risk that an investor
must consider, such as market risk, political risk, business risk, and
others.Typically, the larger the risk,
the larger the possibility for return. The best way to minimize your risk is to
properly diversify your portfolio.

5) Taxation.Your income and capital
gains are taxed unless the stocks are held in certain types of retirement
accounts. Some investment strategies can
reduce tax liability, but as with all other investment considerations, this
must be done with care and prudence.

6) Trade fees.These fees are imposed when stock
is bought or sold. Some brokers will
label this fee as a “transaction fee.” Trade
fees can range in price, so be sure to research a broker’s fees before making
transactions.

7)Cyclical vs. Defensive.Cyclical stocks are sensitive to the
economic cycle.In tight economic times,
people are less likely to spend money on unnecessary items, such as retail and
entertainment, which can impact cyclical stock prices.Defensive stocks include necessary items,
such as food and medicine.For this
reason, defensive stocks tend to change very little when the economy declines.

8) Selecting stocks. The
first step in selecting a stock to purchase is to determine your objective and risk
tolerance.You must also remember the importance
of diversification, as investing in a single company is much riskier than
investing in, say, eight or ten companies. The more you know about a company and about the
current market, the better. You can also
narrow your search for stocks using a stock screening tool.

9) Diversification.This is a
technique used to reduce risk in a portfolio whereby a variety of investments
are placed within a portfolio instead of investing in only a few companies.As an example, Charles
Schwab & Company has created the following visual representation showing
how to diversify your portfolio:

10) Stocks vs. Mutual Funds. Mutual
funds are used to diversify a portfolio better than individual stocks
allow.Each mutual fund contains
holdings of several different individual securities, allowing an investor to
easily spread his or her investment dollars among several companies instead of
just one.Another advantage of mutual
funds over stocks is that each fund has a professional manager of its own, who
buys and sells securities within the fund so the individual investor doesn’t
have to.Every investor is different, so
individual circumstances must be fully considered when constructing a
portfolio.

Wednesday, July 17, 2013

This week’s
featured pin discusses investment fees and expenses, which are too often
confusing and unclear.At Family
Investment Center, we do our best to simplify these fees and to make our fees
completely transparent to our clients. With that, here are 10 Things to Know
about Investment Fees and Expenses:

1.You must consider transaction costs. “Discount brokers” charge $9-20 per trade, but
full service brokerage trades can run to hundreds of dollars per trade. Bonds
are often traded on a hidden “mark-up” basis that can easily be $100-$300 per
bond.

2.Annual account fees. These are administrative fees some
custodial companies charge on accounts each year.

3.Front-end vs. Back-end load.It is just
like it sounds; front-end charges a fee up front when you make a purchase and
back-end charges a fee when you sell a particular fund.Be sure to watch for loads when buying and
selling securities.

4.Expense Ratio.This is what
a portfolio manager charges to manage a mutual fund.The expense ratio is represented as a
percentage, which is deducted from your returns.The lower the expense ratio, the higher
percentage of return you keep in your pocket. This is usually an ongoing fee in
addition to front- or back-end loads.

5.Investment Management Fees.A fee charged as a percentage of the
total assets being managed for discretionary accounts, where a manager makes
decisions on behalf of the client.

6.Administrative fees. These fees are included in the
expense ratio of a mutual fund.They
cover the costs of maintaining the customer service line, mailing,
record-keeping for the fund, and so on.

7.12 b-1 Distribution.This fee can range from
0.25%-1.0%.It covers the cost of
advertising and distribution. This fee is built into the expense ratio of a
mutual fund.

8.Commission-based vs. Fee-Only- Commission-based
agents are limited to only what they have available to offer, which could fall
short in offerings in their clients’ best interests. The commissions are an
added expense in the product. Put simply, commission-based brokers often offer a
narrower range of products with higher expenses.

9.Family Investment Center works to
find stellar managers while keeping expense ratios as low as possible.Utilizing Morningstar® research software to
explore a large universe of investments, we are able to choose those that are
in our clients’ best interests without judgment being clouded by commissions or
trade fees.

10.AtFamily
Investment Center, our only compensation is an annual management fee, which is
a small percentage of assets under management.We do not receive compensation based on sales.Period.

Monday, July 15, 2013

CNN Money presented an interesting article on high school personal finance education. The Center for Financial Literacy at Champlain College has reviewed all 50 states and graded them. Eleven states recieved an F, where personal finance is not a requirement for students and may not even be offered. Missouri is one of seven states to pass with an A. Missouri requires students to enroll in a minimum of one semester to learning about personal finance. It is an extremely important topic for students to learn about. Only 40% of states recieved an A or B when graded on personal finance education. To learn more about how states were graded and how other states performed, please click here.

7.Expect
the unexpected. It’s necessary to
allow cushion in your budget to pay for unexpected expenses.An emergency fund is crucial!Aim for enough to take care of 3 to 6 months
of expenses.

8.If you
fall off track one month, get back on the next. If you spend more than budgeted one month,
don’t get discouraged and give up. Spend
less the next month or reevaluate your budget allowances. Make necessary adjustments and don’t give up!

9.Helping
yourself will help your children. Your
children learn by watching you. Help
instill good spending habits in your children.

10.Really think about big purchases before you
make them. Don’t rush into
anything!This will also help to prevent
buyer’s remorse when you get home.

Stay tuned for next week’s pin! Also, check out our boards
on Pinterest!

Monday, July 1, 2013

We are very excited to inform you about the launching of our
new Pinterest account! Each Monday through the month of July, The Family
Investment Center will be blogging “Ten Things You Need to Know About…” Each
post will be featured on our Pinterest. We encourage you to follow us on
Pinterest and check out our boards!

The Launching Pin for our Pinterest is Ten Things You Need to Know About Family Investment Center:

1.We have been serving clients since
1998.We use proven strategies and
quality investments to best meet the needs of our clients. Family Investment
Center had their 15 year anniversary on June 1st.

2.We serve clients like you.Family Investment Center was built from
the ground up to serve families similar to yours.

3.We manage over 100 million dollars in
client assets.

4.We operate in a commission-free
environment.We do not earn
commissions for selling certain products.We are fee-only, meaning we charge only a small percentage of each client’s
assets annually.

5.We have a broad selection of products to
choose from. Commissions typically
limit the products that are available to clients to the products that provide commissions
to the broker.Fee-only advisors aren’t
tied to a certain group of products since we don’t depend on commissions.

7.Each investment portfolio has a dedicated
team working on the individual portfolio. Our team brings “group think” in a very
positive way to ensure the best practices are being utilized.

8.We have had numerous media mentions. We are proud to have such a strong
presence in the St. Joseph Community and beyond. We have been mentioned in publications such as
The Wall Street Journal, The New York Times, BusinessWeek, Kiplinger, Medical Economics, and many others.To view our media mentions, please click
here.

10.We serve clients in 13 states from one
office in St. Joseph, Missouri.We
have fine-tuned our processes to allow us to efficiently serve folks all over
the nation from one office.This allows
us to keep overhead costs down, which in turn means we can keep our management
fees low.

About Me

Dan Danford is founder and CEO of Family Investment Center in St. Joseph, Missouri. The firm is a commission-free investment advisor registered with the SEC. Danford and other advisors at the firm specialize in managing large portfolios of traditional investments. They do, however, advise investors on a broad range of wealth management services. More about Danford and this unique firm can be found at www.familyinvestmentcenter.com or call (816) 233-4100.